SEC Filing | Gartner, Inc.

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it-20200930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
			For the quarterly period ended September 30, 2020
			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number 1-14443

Gartner, Inc.

(Exact name of Registrant as specified in its charter)


Delaware									04-3099750
(State or other jurisdiction of									(I.R.S. Employer
incorporation or organization)									Identification Number)

P.O. Box 10212									06902-7700
56 Top Gallant Road									(Zip Code)
Stamford,
Connecticut
(Address of principal executive offices)

Registrant’s telephone number, including area code: (203) 316-1111

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $.0005 par value per share	IT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 30, 2020, 89,286,873 shares of the registrant’s common shares were outstanding.

Table of Contents


			Page
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Condensed Consolidated Balance Sheets at September 30, 2020 and December 31, 2019			3
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended Se ptember 30, 2020 and 2019			4
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2020 and 2019			5
Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2020 and 2019			6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019			8
Notes to Condensed Consolidated Financial Statements			9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			29
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			43
ITEM 4. CONTROLS AND PROCEDURES			44
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			45
ITEM 1A. RISK FACTORS			45
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			46

ITEM 6. EXHIBITS			46

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited; in thousands, except share data)


	September 30,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	553,715	$	280,836
Fees receivable, net of allowances of $10,000 and $8,000, respectively	948,864		1,326,012
Deferred commissions	207,938		265,867
Prepaid expenses and other current assets	154,887		146,026
Total current assets	1,865,404		2,018,741
Property, equipment and leasehold improvements, net	332,891		344,579
Operating lease right-of-use assets	651,813		702,916
Goodwill	2,938,708		2,937,726
Intangible assets, net	820,994		925,087
Other assets	230,792		222,245
Total Assets	$	6,840,602	$	7,151,294
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	790,260	$	788,796
Deferred revenues	1,710,791		1,928,020
Current portion of long-term debt	20,511		139,718
Total current liabilities	2,521,562		2,856,534
Long-term debt, net of deferred financing fees	1,957,473		2,043,888
Operating lease liabilities	785,705		832,533
Other liabilities	538,359		479,746
Total Liabilities	5,803,099		6,212,701
Stockholders’ Equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized; none issued or outstanding	—		—
Common stock, $0.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for both periods	82		82
Additional paid-in capital	1,960,143		1,899,273
Accumulated other comprehensive loss, net	(130,213)		(77,938)
Accumulated earnings	2,135,860		1,988,722
Treasury stock, at cost, 74,193,907 and 74,444,288 common shares, respectively	(2,928,369)		(2,871,546)
Total Stockholders’ Equity	1,037,503		938,593
Total Liabilities and Stockholders’ Equity	$	6,840,602	$	7,151,294

See the accompanying notes to condensed consolidated financial statements.

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited; in thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues:
Research	$	892,719	$	840,998	$	2,677,339	$	2,492,427
Conferences	12,738		66,286		26,925		259,392
Consulting	89,161		93,218		282,380		290,009

Total revenues	994,618		1,000,502		2,986,644		3,041,828
Costs and expenses:
Cost of services and product development	329,767		365,056		993,596		1,099,700
Selling, general and administrative	521,508		512,159		1,512,987		1,545,905
Depreciation	22,743		20,704		67,988		60,578
Amortization of intangibles	31,228		31,694		94,615		97,541
Acquisition and integration charges	1,722		1,742		5,438		4,156
Total costs and expenses	906,968		931,355		2,674,624		2,807,880
Operating income	87,650		69,147		312,020		233,948
Interest expense, net	(30,538)		(24,073)		(87,182)		(73,669)
Loss from divested operations	—		—		—		(2,075)
Loss on extinguishment of debt	(44,814)		—		(44,814)		—
Other income (expense), net	1,869		8,024		(10,046)		6,953
Income before income taxes	14,167		53,098		169,978		165,157
(Benefit) provision for income taxes	(2,797)		11,710		22,840		(432)
Net income	$	16,964	$	41,388	$	147,138	$	165,589

Net income per share:
Basic	$	0.19	$	0.46	$	1.65	$	1.84
Diluted	$	0.19	$	0.46	$	1.63	$	1.82
Weighted average shares outstanding:
Basic	89,378		89,846		89,307		89,947
Diluted	89,955		90,887		90,002		91,089

See the accompanying notes to condensed consolidated financial statements.

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited; in thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Net income	$	16,964	$	41,388	$	147,138	$	165,589
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	7,498		3,553		(15,066)		9,078
Interest rate swaps – net change in deferred gain or loss	4,379		(11,379)		(37,453)		(50,599)
Pension plans – net change in deferred actuarial loss	85		41		244		124
Other comprehensive income (loss), net of tax	11,962		(7,785)		(52,275)		(41,397)
Comprehensive income	$	28,926	$	33,603	$	94,863	$	124,192

See the accompanying notes to condensed consolidated financial statements.

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited; in thousands)

Three and Nine Months Ended September 30, 2020


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss, Net		Accumulated Earnings		Treasury Stock		Total
Balance at December 31, 2019	$	82	$	1,899,273	$	(77,938)	$	1,988,722	$	(2,871,546)	$	938,593
Net income	—		—		—		75,097		—		75,097
Other comprehensive loss	—		—		(91,034)		—		—		(91,034)
Issuances under stock plans	—		(1,794)		—		—		7,448		5,654
Common share repurchases	—		—		—		—		(63,164)		(63,164)
Stock-based compensation expense	—		25,129		—		—		—		25,129
Balance at March 31, 2020	$	82	$	1,922,608	$	(168,972)	$	2,063,819	$	(2,927,262)	$	890,275
Net income	—		—		—		55,077		—		55,077
Other comprehensive income	—		—		26,797		—		—		26,797
Issuances under stock plans	—		3,223		—		—		867		4,090
Common share repurchases	—		—		—		—		(698)		(698)
Stock-based compensation expense	—		15,678		—		—		—		15,678
Balance at June 30, 2020	$	82	$	1,941,509	$	(142,175)	$	2,118,896	$	(2,927,093)	$	991,219
Net income	—		—		—		16,964		—		16,964
Other comprehensive income	—		—		11,962		—		—		11,962
Issuances under stock plans	—		3,133		—		—		979		4,112
Common share repurchases	—		—		—		—		(2,255)		(2,255)
Stock-based compensation expense	—		15,501		—		—		—		15,501
Balance at September 30, 2020	$	82	$	1,960,143	$	(130,213)	$	2,135,860	$	(2,928,369)	$	1,037,503

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited; in thousands)

Three and Nine Months Ended September 30, 2019


	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss, Net		Accumulated Earnings		Treasury Stock		Total
Balance at December 31, 2018	$	82	$	1,823,710	$	(39,867)	$	1,755,432	$	(2,688,600)	$	850,757
Net income	—		—		—		20,795		—		20,795
Other comprehensive loss	—		—		(21,699)		—		—		(21,699)
Issuances under stock plans	—		(2,911)		—		—		7,973		5,062
Common share repurchases	—		—		—		—		(29,837)		(29,837)
Stock-based compensation expense	—		31,819		—		—		—		31,819
Balance at March 31, 2019	$	82	$	1,852,618	$	(61,566)	$	1,776,227	$	(2,710,464)	$	856,897
Net income	—		—		—		103,406		—		103,406
Other comprehensive loss	—		—		(11,913)		—		—		(11,913)
Issuances under stock plans	—		3,140		—		—		875		4,015
Common share repurchases	—		—		—		—		(1,723)		(1,723)
Stock-based compensation expense	—		13,120		—		—		—		13,120
Balance at June 30, 2019	$	82	$	1,868,878	$	(73,479)	$	1,879,633	$	(2,711,312)	$	963,802
Net income	—		—		—		41,388		—		41,388
Other comprehensive loss	—		—		(7,785)		—		—		(7,785)
Issuances under stock plans	—		3,538		—		—		633		4,171
Common share repurchases	—		—		—		—		(94,873)		(94,873)
Stock-based compensation expense	—		12,954		—		—		—		12,954
Balance at September 30, 2019	$	82	$	1,885,370	$	(81,264)	$	1,921,021	$	(2,805,552)	$	919,657

GARTNER, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited; in thousands)


	Nine Months Ended
	September 30,
	2020		2019
Operating activities:
Net income	$	147,138	$	165,589
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	162,603		158,119
Stock-based compensation expense	56,308		57,893
Deferred taxes	(6,548)		(50,790)
Loss from divested operations	—		2,075
Loss on extinguishment of debt	44,814		—
Fair value adjustment - equity security	—		(9,120)
Reduction in the carrying amount of operating lease right-of-use assets	62,876		63,692
Amortization and write-off of deferred financing fees	7,487		4,865
Amortization of deferred swap losses from de-designation	10,320		—
Loss on de-designated swaps	476		—
Changes in assets and liabilities:
Fees receivable, net	369,119		215,132
Deferred commissions	56,094		35,329
Prepaid expenses and other current assets	(9,104)		(941)
Other assets	(3,509)		(46,954)
Deferred revenues	(210,170)		70,006
Accounts payable and accrued and other liabilities	(45,074)		(182,294)
Cash provided by operating activities	642,830		482,601
Investing activities:
Additions to property, equipment and leasehold improvements	(60,845)		(95,701)
Acquisitions - cash paid (net of cash acquired)	—		(2,295)


Cash used in investing activities	(60,845)		(97,996)
Financing activities:
Proceeds from employee stock purchase plan	13,813		13,235
Proceeds from borrowings	2,000,000		5,000
Early redemption premium payment	(30,752)		—
Payments of deferred financing fees	(23,627)		—
Proceeds from revolving credit facility	327,000		281,000
Payments on revolving credit facility	(475,000)		(316,000)
Payments on borrowings	(2,053,342)		(74,612)
Purchases of treasury stock	(76,117)		(141,436)
Cash used in financing activities	(318,025)		(232,813)
Net increase in cash and cash equivalents	263,960		151,792
Effects of exchange rates on cash and cash equivalents	8,919		(3,728)
Cash and cash equivalents and restricted cash, beginning of period	280,836		158,663
Cash and cash equivalents, end of period	$	553,715	$	306,727

See the accompanying notes to condensed consolidated financial statements.

GARTNER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 — Business and Basis of Presentation

Business. Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission–critical priorities today and build the successful organizations of tomorrow. We believe our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and an objective resource for more than 14,000 enterprises in more than 100 countries — across all major functions, in every industry and enterprise size.

Segments. Gartner delivers its products and services globally through three business segments: Research, Conferences and Consulting. Revenues and other financial information for our segments are discussed in Note 5 — Segment Information.

Basis of presentation. The accompanying interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270 for interim financial information and with the applicable instructions of U.S. Securities and Exchange Commission (“SEC”) Rule 10-01 of Regulation S-X on Form 10-Q, and should be read in conjunction with the consolidated financial statements and related notes of the Company in its Annual Report on Form 10-K for the year ended December 31, 2019.

The fiscal year of Gartner is the twelve-month period from January 1 through December 31. In the opinion of management, all normal recurring accruals and adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented herein have been included. The results of operations for the three and nine months ended September 30, 2020 may not be indicative of the results of operations for the remainder of 2020 or beyond. When used in these notes, the terms “Gartner,” the “Company,” “we,” “us,” or “our” refer to Gartner, Inc. and its consolidated subsidiaries.

Principles of consolidation. The accompanying interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

Use of estimates. The preparation of the accompanying interim condensed consolidated financial statements requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of fees receivable, goodwill, intangible assets and other long-lived assets, as well as tax accruals and other liabilities. In addition, estimates are used in revenue recognition, income tax expense or benefit, performance-based compensation charges, depreciation and amortization. Management believes its use of estimates in these interim condensed consolidated financial statements to be reasonable.

Management continually evaluates and revises its estimates using historical experience and other factors, including the general economic environment and actions it may take in the future. Management adjusts these estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time. As a result, differences between our estimates and actual results could be material and would be reflected in the Company’s consolidated financial statements in future periods.

In December 2019, a novel coronavirus disease (“COVID-19”) was reported in Wuhan, China and on March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. Any future asset impairment charges, increase in allowance for doubtful accounts, or restructuring charges could be more likely if the negative effects of the COVID-19 pandemic continue and will be dependent on the severity and duration of this crisis. To date, the Company has not observed any material impairments of its assets or a significant change in the fair value of assets due to the COVID-19 pandemic.

Revenue recognition. Revenue is recognized in accordance with the requirements of FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). Revenue is only recognized when all of the required criteria for revenue recognition have been met. The accompanying Condensed Consolidated Statements of Operations present revenue net of any sales or value-added taxes that we collect from customers and remit to government authorities. ASC Topic 270 requires certain disclosures in interim financial statements around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Note 2 — Revenue and Related Matters provides additional information regarding the Company’s revenues.

Acquisition and divestiture activities. The Company recognized $1.7 million of Acquisition and integration charges during each of the three months ended September 30, 2020 and 2019. The Company recognized $5.4 million and $4.2 million of Acquisition and integration charges during the nine months ended September 30, 2020 and 2019, respectively. Acquisition and integration charges reflect additional costs and expenses resulting from our acquisitions and include, among other items, professional fees, severance and stock-based compensation charges. Although the Company did not complete any business acquisitions during the nine months ended September 30, 2020 or 2019, it paid $2.3 million of restricted cash in 2019 for deferred consideration from a 2017 acquisition.

During the nine months ended September 30, 2019, the Company recorded a pretax Loss from divested operations of $2.1 million, primarily due to adjustments of certain working capital balances related to divestitures that were completed in 2018.

Adoption of new accounting standards. The Company adopted the accounting standards described below during the nine months ended September 30, 2020.

Implementation Costs in a Cloud Computing Arrangement — In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU No. 2018-15”). ASU No. 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Costs that are capitalized under ASU No. 2018-15 will be expensed over the term of the cloud computing arrangement. Gartner adopted ASU No. 2018-15 on January 1, 2020 on a prospective basis. The adoption of ASU No. 2018-15 did not have a material impact on the Company’s condensed consolidated financial statements.

Fair Value Measurement Disclosures — In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No. 2018-13”). ASU No. 2018-13, which is part of the FASB’s broader disclosure framework project, modified and supplemented the previous U.S. GAAP disclosure requirements pertaining to fair value measurements, with an emphasis on Level 3 disclosures of the valuation hierarchy. Gartner adopted ASU No. 2018-13 on January 1, 2020. The adoption of ASU No. 2018-13 did not have a material impact on the Company’s condensed consolidated financial statements.

Goodwill Impairment — In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other - Simplifying the Test for Goodwill Impairment (“ASU No. 2017-04”). ASU No. 2017-04 simplified the determination of the amount of goodwill to be potentially charged off by eliminating Step 2 of the goodwill impairment test under previous U.S. GAAP. Gartner adopted ASU No. 2017-04 on January 1, 2020. The adoption of ASU No. 2017-04 did not have a material impact on the Company’s condensed consolidated financial statements.

Financial Instrument Credit Losses — In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (“ASU No. 2016-13”). ASU No. 2016-13 amended the previous financial instrument impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. Gartner adopted ASU No. 2016-13 on January 1, 2020 with no cumulative effect adjustment to the Company’s opening retained earnings. The Company applied the expected credit loss model to its fees receivable balance on January 1, 2020 using a historical loss rate method. The Company’s trade receivables are collected fairly quickly and its credit losses have historically been low. The adoption of ASU No. 2016-13 did not have a material impact on the Company’s condensed consolidated financial statements.

Accounting standards issued but not yet adopted. The FASB has issued accounting standards that have not yet become effective and may impact the Company’s consolidated financial statements or related disclosures in future periods. Those standards and their potential impact are discussed below.

Accounting standard effective immediately upon voluntary election by Gartner

Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform—Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”). ASU No. 2020-04 provides that an entity can elect not to apply certain required modification accounting in U.S. GAAP to contracts where all changes to the critical terms relate to reference rate reform (e.g., the expected discontinuance of LIBOR and the transition to an alternative reference interest rate, etc.). In addition, the rule provides optional expedients and exceptions that enable entities to continue to apply hedge accounting for hedging relationships where one or more of the critical terms change due to reference rate reform. The rule became effective for all entities as of March 12, 2020 and will generally no longer be available to apply after December 31, 2022. The Company is currently evaluating the potential impact of ASU No. 2020-04 on its consolidated financial statements, including the rule’s potential impact on any debt modifications or other contractual changes in the future that may result from reference rate reform.

Accounting standard effective in the fourth quarter of 2020

Defined Benefit Plan Disclosures — In August 2018, the FASB issued ASU No. 2018-14, Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU No. 2018-14”). ASU No. 2018-14, which is part of the FASB’s broader disclosure framework project, modifies and supplements the current U.S. GAAP annual disclosure requirements for employers that sponsor defined benefit pension plans. ASU No. 2018-14 is effective for Gartner in the fourth quarter of 2020. ASU No. 2018-14 must be adopted on a retroactive basis and applied to each comparative period presented in an entity’s financial statements. The adoption of ASU No. 2018-14 is currently not expected to have a material impact on the Company’s financial statement disclosures.

Accounting standard effective in 2021

Simplifying the Accounting for Income Taxes — In December 2019, the FASB issued ASU No. 2019-12, Income Taxes—Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). ASU No. 2019-12 provides new guidance to simplify the accounting for income taxes in certain areas, changes the accounting for select income tax transactions and makes minor ASC improvements. ASU No. 2019-12 is effective for Gartner on January 1, 2021, including interim periods in the year of adoption. Early adoption is permitted. The method of adoption varies depending on the component of the new rule that is being adopted. The Company is currently evaluating the potential impact of ASU No. 2019-12 on our consolidated financial statements.

Note 2 — Revenue and Related Matters

Disaggregated Revenue — The Company’s disaggregated revenue by reportable segment is presented in the tables below for the periods indicated (in thousands).

By Primary Geographic Market (1)

Three Months Ended September 30, 2020


Primary Geographic Market	Research		Conferences		Consulting		Total
United States and Canada	$	574,203	$	10,669	$	55,389	$	640,261
Europe, Middle East and Africa	210,152		2,064		23,495		235,711
Other International	108,364		5		10,277		118,646
Total revenues	$	892,719	$	12,738	$	89,161	$	994,618

Three Months Ended September 30, 2019


Primary Geographic Market	Research		Conferences		Consulting		Total
United States and Canada	$	538,112	$	28,153	$	58,615	$	624,880
Europe, Middle East and Africa	196,121		24,497		26,468		247,086
Other International	106,765		13,636		8,135		128,536
Total revenues	$	840,998	$	66,286	$	93,218	$	1,000,502

Nine Months Ended September 30, 2020



Primary Geographic Market	Research		Conferences		Consulting		Total
United States and Canada	$	1,737,603	$	16,966	$	167,570	$	1,922,139
Europe, Middle East and Africa	612,946		4,211		83,691		700,848
Other International	326,790		5,748		31,119		363,657
Total revenues	$	2,677,339	$	26,925	$	282,380	$	2,986,644

Nine Months Ended September 30, 2019



Primary Geographic Market	Research		Conferences		Consulting		Total
United States and Canada	$	1,593,806	$	157,756	$	175,208	$	1,926,770
Europe, Middle East and Africa	583,742		67,520		90,350		741,612
Other International	314,879		34,116		24,451		373,446
Total revenues	$	2,492,427	$	259,392	$	290,009	$	3,041,828

(1)Revenue is reported based on where the sale is fulfilled.

The Company’s revenue is generated primarily through direct sales to clients by domestic and international sales forces and a network of independent international sales agents. Most of the Company’s products and services are provided on an integrated worldwide basis and, because of this integrated delivery approach, it is not practical to precisely separate our revenue by geographic location. Accordingly, revenue information presented in the above tables is based on internal allocations, which involve certain management estimates and judgments.

By Timing of Revenue Recognition

Three Months Ended September 30, 2020


Timing of Revenue Recognition	Research		Conferences		Consulting		Total
Transferred over time (1)	$	823,658	$	—	$	73,989	$	897,647
Transferred at a point in time (2)	69,061		12,738		15,172		96,971
Total revenues	$	892,719	$	12,738	$	89,161	$	994,618

Three Months Ended September 30, 2019


Timing of Revenue Recognition	Research		Conferences		Consulting		Total
Transferred over time (1)	$	769,718	$	—	$	77,570	$	847,288
Transferred at a point in time (2)	71,280		66,286		15,648		153,214
Total revenues	$	840,998	$	66,286	$	93,218	$	1,000,502

Nine Months Ended September 30, 2020



Timing of Revenue Recognition	Research		Conferences		Consulting		Total
Transferred over time (1)	$	2,463,434	$	—	$	224,027	$	2,687,461
Transferred at a point in time (2)	213,905		26,925		58,353		299,183
Total revenues	$	2,677,339	$	26,925	$	282,380	$	2,986,644

Nine Months Ended September 30, 2019



Timing of Revenue Recognition	Research		Conferences		Consulting		Total
Transferred over time (1)	$	2,276,783	$	—	$	235,641	$	2,512,424
Transferred at a point in time (2)	215,644		259,392		54,368		529,404
Total revenues	$	2,492,427	$	259,392	$	290,009	$	3,041,828

(1)Research revenues were recognized in connection with performance obligations that were satisfied over time using a time-elapsed output method to measure progress. Consulting revenues were recognized over time using labor hours as an input measurement basis.

(2)The revenues in this category were recognized in connection with performance obligations that were satisfied at the point in time that the contractual deliverables were provided to the customer.

Performance Obligations — For customer contracts that are greater than one year in duration, the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2020 was approximately $2.9 billion. The Company expects to recognize $554.0 million, $1,622.4 million and $695.9 million of this revenue (most of which pertains to Research) during the remainder of 2020, the year ending December 31, 2021 and thereafter, respectively. The Company applies a practical expedient that is permitted under ASC Topic 606 and, accordingly, it does not disclose such performance obligation information for customer contracts that have original durations of one year or less. Our performance obligations for contracts meeting this ASC Topic 606 disclosure exclusion primarily include: (i) stand-ready services under Research subscription contracts; (ii) holding conferences and meetings where attendees and exhibitors can participate; and (iii) providing customized Consulting solutions for clients under fixed fee and time and materials engagements. The remaining duration of these performance obligations is generally less than one year, which aligns with the period that the parties have enforceable rights and obligations under the affected contracts.

Customer Contract Assets and Liabilities — The timing of the recognition of revenue and the amount and timing of our billings and cash collections, including upfront customer payments, result in the recognition of both assets and liabilities on our consolidated balance sheet. The table below provides information regarding certain of the Company’s balance sheet accounts that pertain to its contracts with customers (in thousands).


	September 30,		December 31,
	2020		2019
Assets:
Fees receivable, gross (1)	$	958,864	$	1,334,012
Contract assets recorded in Prepaid expenses and other current assets (2)	$	23,990	$	21,350
Contract liabilities:
Deferred revenues (current liability) (3)	$	1,710,791	$	1,928,020
Non-current deferred revenues recorded in Other liabilities (3)	26,051		24,409
Total contract liabilities	$	1,736,842	$	1,952,429

(1)Fees receivable represent an unconditional right of payment from our customers and include both billed and unbilled amounts.

(2)Contract assets represent recognized revenue for which we do not have an unconditional right to payment as of the balance sheet date because the project may be subject to a progress billing milestone or some other billing restriction.

(3)Deferred revenues represent amounts (i) for which the Company has received an upfront customer payment or (ii) that pertain to recognized fees receivable. Both situations occur before the completion of our performance obligation(s).

The Company recognized revenue of $681.6 million and $675.2 million during the three months ended September 30, 2020 and 2019, respectively, and $1,354.2 million and $1,312.3 million during the nine months ended September 30, 2020 and 2019, respectively, that was attributable to deferred revenues that were recorded at the beginning of each such period. Those amounts

primarily consisted of (i) Research revenues that were recognized ratably as control of the goods or services passed to the customer and (ii) Conferences revenue pertaining to conferences and meetings that occurred during the reporting periods. During each of the three and nine months ended September 30, 2020 and 2019, the Company did not record any material impairments related to its contract assets. The Company does not typically recognize revenue from performance obligations satisfied in prior periods.

Note 3 — Computation of Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS reflects the potential dilution of securities that could share in earnings. When the impact of common share equivalents is anti-dilutive, they are excluded from the calculation.

The table below sets forth the calculation of basic and diluted income per share for the periods indicated (in thousands, except per share data).


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Numerator:
Net income used for calculating basic and diluted income per common share	$	16,964	$	41,388	$	147,138	$	165,589
Denominator:
Weighted average common shares used in the calculation of basic income per share	89,378		89,846		89,307		89,947
Common stock equivalents associated with stock-based compensation plans (1)	577		1,041		695		1,142
Shares used in the calculation of diluted income per share	89,955		90,887		90,002		91,089
Basic income per share	$	0.19	$	0.46	$	1.65	$	1.84
Diluted income per share	$	0.19	$	0.46	$	1.63	$	1.82

(1)Certain common stock equivalents were not included in the computation of diluted income per share because the effect would have been anti-dilutive. For the three and nine months ended September 30, 2020, approximately 0.5 million and 0.8 million, respectively, common stock equivalents were excluded from the calculation of diluted income per share because they were anti-dilutive. These common share equivalents totaled approximately 0.3 million and 0.2 million for the three and nine months ended September 30, 2019, respectively.

Note 4 — Stock-Based Compensation

The Company grants stock-based compensation awards as an incentive for employees and directors to contribute to the Company’s long-term success. The Company currently awards stock-settled stock appreciation rights, service-based and performance-based restricted stock units, and common stock equivalents. As of September 30, 2020, the Company had 4.3 million shares of its common stock, par value $0.0005 per share, (the “Common Stock”) available for stock-based compensation awards under its 2014 Long-Term Incentive Plan.

The tables below summarize the Company’s stock-based compensation expense by award type and expense category line item during the periods indicated (in millions).


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Award type	2020		2019		2020		2019
Stock appreciation rights	$	2.1	$	1.0	$	5.7	$	5.8
Restricted stock units	13.2		11.8		50.0		51.5
Common stock equivalents	0.2		0.2		0.6		0.6
Total (1)	$